Monday, September 9, 2013

Energy Scarcity

India is the 4th largest consumer of energy in the world after US, Russia and China (2013). As the economy moves on a path of faster-growth, demand for energy is set to increase substantially.

India depends on coal to meet over half of its energy requirement with the remaining being met by crude oil, natural gas, hydro-power, and wind and solar energy. Demand for energy is increasing from all sectors, while its supply has not been able to keep up with the demand. To meet the demand, it largely depends on imports. In such a situation, any slight imbalance in the global prices of such imports can upset India's external sector. Besides, since energy prices are subsidised in India, the fiscal health is also impacted severely.

Such a situation would need strict measures to ensure that energy scarcity doesn't become a drag on the Indian economy.

How to mitigate this problem?
a) Investment in creation of technologies that seek to tap solar and wind energy in a sustainable and cost-effective manner would be a perfect solution to crush the problem of energy scarcity in its entirety.
b) Minimize losses during transmission and distribution of power would also tackle this problem to some extent.
c) Promoting public transport can reduce the demand for petrol and diesel which has risen owing to rapid proliferation of private vehicles on Indian roads.
d) A rational pricing policy for energy can incentivise economic usage of scarce energy resources.
e) Above all, becoming more energy efficient is another technique that can be suitably applied to tackle the issue. This will require greater awareness among users, households and industries alike. Labeling of equipment such as AC, cars and other high energy consuming equipment, incentivising industries to go green etc. can go a long way in saving energy.

Overcoming the challenge of energy scarcity will go a long way in sustaining India's economic growth in the long-run.

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